Exxon Corp. v. FTC

Decision Date30 January 1976
Docket NumberCiv. A. No. 75-167.
Citation411 F. Supp. 1362
PartiesEXXON CORPORATION et al., Plaintiffs, v. FEDERAL TRADE COMMISSION et al., Defendants.
CourtU.S. District Court — District of Delaware



Thomas Herlihy, Jr., of Herlihy & Herlihy, Wilmington, Del., for Exxon Corp.; William Simon, John S. Kingdon, Robert G. Abrams, and Robert J. Brookhiser of Howrey & Simon, Washington, D. C., of counsel.

James M. Tunnell, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for Texaco, Gulf Oil and Shell Oil; Robert F. McGinnis, William C. Weitzel, Jr., and Philip W. Schaefer, New York City; Milton Handler, Fred A. Freund, and Milton J. Schubin of Kaye, Scholer, Fierman, Hays & Handler, New York City of counsel, for Texaco; Jesse P. Luton, Jr., John E. Bailey, and W. Bernard Fudge, Houston, Tex., of counsel, for Gulf Oil; Edward F. Howrey, J. Wallace Adair, Keith E. Pugh, Jr., and James R. Fox, Washington, D. C., of counsel, for Shell Oil.

W. Laird Stabler, Jr., U. S. Atty., and Kent Walker, Asst. U. S. Atty., Wilmington, Del., for defendants; Robert J. Lewis, Gen. Counsel, Gerald P. Norton, Deputy Gen. Counsel, Gerald Harwood, Asst. Gen. Counsel and John T. Fischbach, F. T. C., Washington, D. C., of counsel.


CALEB M. WRIGHT, Senior District Judge.

This is an effort by certain major oil producing and marketing corporations to appeal an interlocutory order entered by an Administrative Law Judge and affirmed by the Federal Trade Commission. Although the factual background is not complex, certain facets of the case, including the order issued, are novel. An understanding of the background of the case is therefore necessary to an understanding of the ruling of the Court.

I. Factual Background

The plaintiffs in this action are four major oil companies1 which, with certain others,2 are respondents in a complaint filed before the Federal Trade Commission ("Commission"). That complaint, FTC Docket No. 8934, is the culmination of an investigation conducted by the Commission staff during the past several years on the "anticompetitive structure" of the market in the production, refining and marketing of crude oil and refined oil products. The complaint alleges that as a result of agreements among the respondents, and actions on their part, there is a restraint of trade in a market defined in the complaint. The actions complained of by the Complaint Counsel3 go back as far as 1948. Counsel for both sides agree that the proceedings on the complaint are likely to consume five to ten more years before a decision on the substantive merits is made by the Commission. See Transcript of Oral Argument at 17.

As a part of the proceedings on the Commission complaint, Complaint Counsel sought and secured the order here at issue from the Administrative Law Judge assigned to the case. The order required the oil companies and Complaint Counsel to refrain from the destruction of virtually all documents in existence at the time the order was issued.4 The Order was issued ex parte, after a written motion by the Complaint Counsel, on the grounds that "document retention programs"5 carried on by the oil companies were likely to destroy what might be potentially relevant evidence.6

Following the issuance of the Order, the oil companies objected to its scope and its ex parte nature. The Administrative Law Judge held a hearing several days after the issuance of the Order.7 At the end of the hearing, the Administrative Law Judge announced his decision that the Order would stand as issued, though the oil companies would have leave to seek changes in the Order with regard to specific documents.8 No further explanation was forthcoming from Complaint Counsel or the Administrative Law Judge as to the nature of the asserted relevance.

The Order was then appealed by the oil companies to the Commission,9 and certain of the oil companies also sought relief from the breadth of the Order by moving to have some categories of documents declared to be outside the Order.10 As a result of these motions, the Administrative Law Judge amended his order to specify that some documents were not within the scope of the Order, and that other documents which were duplicated and duplicable could be destroyed.11

On appeal, the Commission affirmed the issuance of the Order. The Commission declared that although the power had not heretofore been used, it was nonetheless part of the Commission's powers as granted by Congress; and that although it was error for the Order to have issued originally in an ex parte fashion, the error was harmless since it was remedied by a hearing held within a few days from the issuance.12 The Commission also found that the oil companies were not entitled to an amendment of the Order to include certain other government agencies.13

Thereafter the oil companies filed a complaint in this Court, alleging that the Order as then constituted was an unlawful act on the part of the Commission and beyond the scope of its powers; that the Order violated the rights of the oil companies under the Fourth, Fifth, and Fourteenth Amendments to the Constitution; that it was a final order as to which no other relief or later review would be adequate; and that they were entitled on those grounds to a finding that the Order was unlawful and to an injunction against its continuation, or, if the Commission is found to have such power, a declaration that the Order be expanded to include other government agencies. The Commission in response filed a motion to dismiss the Complaint on the grounds that the Order was not a final order; that there were other avenues of review which were adequate to prevent harm to the oil companies; and that the complaint otherwise failed to state a claim upon which relief could be granted. The oil companies opposed the Commission's motion to dismiss and filed a motion for summary judgment on their claim. The issues on both matters were briefed, and oral argument was heard by the Court on December 5, 1975.

For the reasons discussed infra, this Court is of the opinion that the Order must be vacated and remanded to the Commission for further findings. The Court cannot, without a clearer record than is present here, make a determination on the power of the FTC to issue such an order, whether or not it includes other government agencies.

II. Jurisdiction

The Commission has challenged the jurisdiction of the Court to hear this case, urging that neither the Administrative Procedure Act14 nor the Declaratory Judgment Act15 provides for review of orders such as the present one because the plaintiffs have failed to exhaust their administrative remedies; and the order is not a final one in any event. The oil companies assert that jurisdiction does exist, and that review under the APA and the Declaratory Judgment Act is possible.

It is clear in this Circuit that the APA is not a ground for the assertion of jurisdiction.16 However, plaintiffs assert several other grounds of jurisdiction, including 28 U.S.C. §§ 1331(a), 1337, and 1361.17 In the posture of the present motions, the Court is satisfied that jurisdiction to consider the case exists.

A. § 1337

The Third Circuit has held that § 1337 provides a jurisdictional base under conditions similar to those here. In Bachowski v. Brennan, supra, note 16, 502 F.2d at 82-83, aff'd., 421 U.S. 560, 566, 95 S.Ct. 1851, 44 L.Ed.2d 377, the Court held that an action based on provisions of the Labor-Management Reporting and Disclosure Act,18 was a suit arising under an act regulating commerce. There is no doubt that the Federal Trade Commission Act was passed to "protect trade and commerce against unlawful restraints and monopolies," see 15 U.S.C. §§ 44, 45, and this Court is satisfied that an action brought to challenge the power of the Commission to issue particular orders is within the scope of that section.19 See Bachowski v. Brennan, 502 F.2d at 82-3; General Motors v. Volpe, 321 F.Supp. 1112, 1121 (D.Del.1970).

B. § 1331

Since the Court has held that subject matter jurisdiction exists under 28 U.S.C. § 1337, it is clear that jurisdiction must also exist under § 1331, if the amount in controversy exceeds $10,000. The tests under both statutes, except for the amount, are the same. See Peyton v. Railway Express Agency, Inc., 316 U.S. 350, 62 S.Ct. 1171, 86 L.Ed. 1525 (1942); Yancoskie v. Delaware River Port Auth., 528 F.2d 722, 725 (3rd Cir. 1975); Bachowski, supra, 502 F.2d at 82, note 3; and 1 Moore's Fed'l. Prac. ¶ 0.608.-3 at 627. The allegation contained in the complaint that the amount in controversy exceeds $10,000 is not controverted, and therefore subject matter jurisdiction under § 1331 exists.

C. § 1361

In view of the fact that subject matter jurisdiction has been found to exist under 28 U.S.C. §§ 1331 and 1337, the question of availability of relief under § 1361 need not be decided. The Court notes that mandamus relief under § 1361 would be narrower than the relief available under §§ 1331 and 1337 combined with the APA because review of abuse of discretion might not be available. See, Bachowski, supra, 502 F.2d at 83, note 4.20

III. Ripeness and Judicial Review

Many of the points the Commission has raised as jurisdictional questions go not to whether there is subject matter jurisdiction in the federal courts, but whether such jurisdiction ought to be exercised in the present instance. Though the motion to dismiss is made on several bases, the question reduces to whether the order here is sufficiently final to be reviewable, or is otherwise within the usual exceptions to the rule that administrative remedies be exhausted prior to the seeking of judicial relief.21 Plaintiffs urge here that they have exhausted all administrative remedies reasonably available to them, and that in any event, the suit here is within the exceptions to the exhaustion rule.

A. Exceptions to the Requirements for Exhaustion

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